Transaction Profile - Financial Technology Partners

July 14, 2015
FINANCIAL TECHNOLOGY PARTNERS
is pleased to announce its exclusive role as sole strategic and financial advisor to
in its sale to
Financial Technology Partners
555 Mission St., 23rd Floor
San Francisco, CA 94105
Tel: 415.512.8700
The Only Investment Bank
Focused Exclusively on Financial Technology
www.ftpartners.com
Steve McLaughlin
Managing Partner
Tel: 415.992.8880
[email protected]
Highly Confidential and proprietary information. Unauthorized distribution without prior consent from Financial Technology Partners LP or FTP Securities LLC (together “FT Partners”) is strictly prohibited.
This communication should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product or service, nor is it an official confirmation of any transaction, or representative of an official position or
statement of Financial Technology Partners LP, FTP Securities LLC or any other related entity. FTP Securities LLC is a FINRA registered broker-dealer. © 2015
TIO Networks Acquires Softgate Systems
FT Partners Advises Softgate in its Sale to TIO
Transaction Overview and Rationale
Overview of Transaction
■ On July 14, 2015, Softgate Systems (“Softgate”) announced its
sale to TIO Networks (TSX – V:TNC) (“TIO”)
■ Softgate provides an open electronic exchange connecting
product and service providers to cash-preferred customers
■ The Company has grown to operate one of the largest networks
of independent retail-based payment centers in the US
■ TIO will pay up to USD$5 million cash to Softgate, issue a
promissory note of USD$5 million to Softgate Shareholders,
assume approximately $2.5 million of Softgate debt and issue
Softgate Shareholders a total of 25 million TIO shares (1)
■ In addition, TIO has agreed to appoint Joe Allegra from Edison
Partners and Steve Piaker from Napier Park Global Capital to
its board upon the closing of the transaction
Significance of Transaction
■ The transaction is transformational and positions TIO as the
largest North American provider of walk-in bill payment services
■ TIO will have a national platform to provide extensive non-bank
financial services to the unbanked and under-banked population
■ Transaction expected to add USD$37 million in incremental
revenue and USD$5 million in incremental EBITDA to TIO’s
business
FT Partners’ Role
■ FT Partners served as exclusive strategic and financial advisor
to Softgate and its Board of Directors
■ FT Partners leveraged its deep knowledge, extensive
experience and broad industry relationships to help achieve a
highly favorable outcome for stakeholders
■ Transaction demonstrates FT Partners’ continued success
advising top-tier financial technology companies
(1)
Financial Technology Partners LP
FTP Securities LLC
is pleased to announce its exclusive role as
sole strategic and financial advisor to
in its sale to
The Only Investment Bank
Focused Exclusively on Financial Technology
Value of the transaction consists of: (i) a cash component of up to USD$5 million; (ii) a USD$5 million promissory note (subject to adjustment ); (iii) issuance of 25
million TIO shares to the Softgate Shareholders; and (iv) assumption of approximately USD$2.5 million of net debt based on balance sheet at signing.
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TIO Networks Acquires Softgate Systems
Overview of Softgate Systems
Softgate Summary
Softgate operates
the largest
national network
of independent
neighborhoodbased payment
centers in the
country, providing
reliable bill
payment and
prepaid services
to cash-preferred
customers
Softgate Product Overview
CEO:
Rick Auletta
Headquarters:
Fairfield, NJ
Founded:
Locations:
Bill Payment
■
Softgate offers easy to use platform, outstanding
customer service, and a vast distribution network to
reach cash-preferred consumers
■
Bill payment platform can be integrated with virtually
any system, streamlining all front-end and back-end
processes
■
Provides access to prepaid wireless and long distance
for all major providers – Verizon, AT&T, T-Mobile and
Tracfone – plus dozens of other providers at
substantial discounts
■
Softgate distributes stored value cards and prepaid
debit cards through its Retail Payments Exchange –
offerings that increase revenue and overall value of
the merchant and retail locations
■
Softgate Systems provides international top-ups for
every major wireless carrier in over 70 countries –
largest selection in the industry
■
Minutes can be added to phones all over the world,
real-time processing only requires a cell phone
number
■
PayXchange delivers a single platform to supply
essential product offerings at kiosks, point-of-sale
terminals, and online
■
Equipped with a range of products and services,
PayXchange enables cash-preferred customers to pay
bills, purchase prepaid and long distance, among
other financial products
1993
Approximately 21,000
Prepaid Wireless &
Long Distance
■
Softgate provides reliable walk-in bill
payment, domestic and international prepaid
wireless, prepaid long distance, gift cards,
international top-ups and international bill
payments through its PayXchange service
−
■
■
Prepaid Products
Softgate is a fully licensed money
transmitter in all 47 states and
jurisdictions that require such licenses
Large base of over 21,000 retail locations in
the U.S. – more than half of which operate as
PayXchange payment centers
International
Top-Ups
The Company previously received financing
from Edison Ventures and Napier Park
Capital
PayXchange
Source: Softgate website.
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TIO Networks Acquires Softgate Systems
The Softgate Network Serves Multiple Constituents
1
Total Addressable Market of 68mm
Consumers

Access bill pay, prepaid and
other services with cash

Conveniently fulfill urgent, realtime bill payment obligations
3
Billers
2
Prepaid
Retail Payment Locations

Incremental store traffic and
loyalty

Economic Share

Ability to sell number of financial
products to consumers
20k+ Retail Payment Locations
Source: Softgate management.
Provides payment option to
underbanked consumers

PayXchange platform
provides data and ease of
use to billers
9,000 Billers
2.5mm Consumers
Bill Pay

Cash
Reload
4
Other
Payment
Services
Third Party Partners

Distributes adjacent products
using Softgate’s white-labeled
platform

Access to PayXchange through
an online portal, POS and kiosks
30 API Partners
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TIO Networks Acquires Softgate Systems
TIO Overview
TIO Overview
CEO:
Product / Channel Overview
Hamed Shahbazi
Headquarters:
■
Kiosks:
‒
Vancouver, BC
Founded:
1997
■
Employees:
Market Capitalization:
CAD $0.92
CAD $1.09
CAD $0.74
‒
■
LTM High 10/28/14
CAD $1.09
‒
LTM Low 04/01/15
CAD $0.74
■
07/10/15
$0.92
Provides bill payment solutions via TIO’s own over-thecounter POS technology or direct integration (APIs) into
TIO's processing systems
Mobile:
CAD $52 mm
TIO Stock Price Performance
$1.20
$1.10
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
Clerk Assisted / POS:
150
Share Price
Close (07/10/15):
LTM High (10/28/14):
LTM Low (04/01/15):
Provides self-service Financial Services Kiosks that enable
convenience stores to provide their customers with bill
payment services
Mobile bill pay application for iPhone, Android and
BlackBerry phones and tablets; enables retailers to
provide users with detailed bill presentment, payment
history, usage monitor and other bill payment features
Web:
‒
■
Enables billers to white label an online billing solution
Prepaid Services:
($ CAD)
■
‒
Provides Prepaid Services through Global Express
acquisition
‒
Enables retailers to offer customers a variety of ways to
input more minutes onto their wireless phone
Money Orders
■
‒
Provides money orders through Global Express acquisition
‒
Enables retailers to sell money orders to their customers
Select Partners:
…among others
Source: TIO financial statements, TIO website, Capital IQ, Bloomberg.
Note: Market Statistics as of 07/10/15.
5
TIO Networks Acquires Softgate Systems
TIO Overview (cont.)
TIO Network – Key Facts
TIO serves the
“cash-preferred,”
underbanked user
community and
has a significant
portfolio amongst
the largest
wireless and
utility companies
in North America
Revenue Run-Rate (Q3)
CAD$54 million / Year
■
3 mm / Month
8 mm / Year
On July 12, 2013, TIO announced the
acquisition of Globex Financial Services,
Inc.
■
Globex is a bill payment services provider
with an established walk-in bill payment
network throughout the eastern United
States
■
The acquisition strengthened TIO’s position
in the bill payment industry and provided
TIO with a national footprint in the US bill
payment and underbanked financial
services industry
■
On August 5, 2014, TIO announced the
acquisition of VeriFone Commerce
Solutions Inc. (formerly ChargeSmart Inc.)
■
Chargesmart.com is a leading provider of
bill payment services for US consumers
who wish to pay bills online with a credit or
debit card
■
TIO leveraged ChargeSmart's search
engine technology to profitably and
efficiently acquire new customers while
giving end customers an online alternative
to pay their bills
Unique End-User Customers
Gross Margin % (Q3)
Gross Profit Run-Rate (Q3)
TIO Networks – Historical Acquisitions
47%
CAD $25.3 mm / Year
# of Employees
# of Over the Counter
Locations
~150
69,087
# of Self-Service Kiosks
Serviced
2,200
# of Devices owned by TIO
1,203
# of TIO Consumer Accounts
(incl. ChargeSmart)
~1 mm
# of Billers Supported by TIO
10,000
# of “Expedited” or “Same
Day” Billers
Source: TIO financial statements.
Note: “Key Facts” not pro-forma for Softgate acquisition.
700
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Overview of FT Partners
FT Partners Advises KUBRA in its Sale to Hearst
Transaction Overview and Rationale
Overview of Transaction
■
On September 3, 2014, KUBRA announced its 80% sale to the
Hearst Corporation (“Hearst”)
■
Backed by Clairvest, KUBRA provides billing and payment
solutions to customers across multiple industry verticals via
electronic and physical channels
■
The Company has grown to be a leader in the emerging
Customer Interaction Management industry
Significance of Transaction
■
The acquisition increases Hearst’s presence in both the billing
and payments space (already owning CDS Global), while
strengthening its foothold in the utilities vertical
■
CDS Global provides customer relationship management
solutions to publishers, direct marketing firms, etc.
■
Clairvest realized proceeds equal to 13.5x invested capital and
an internal rate of return (“IRR”) of over 40% over eight years
FT Partners’ Role
■
FT Partners served as exclusive strategic and financial advisor
to KUBRA and its Board of Directors
■
FT Partners leveraged its deep knowledge, extensive
experience (understanding all the unique aspects of the
Company’s billing, payments, outsourcing, customer
interaction and electronic commerce businesses) and broad
industry relationships to help achieve a highly favorable
outcome for stakeholders
■
Successfully helped find a unique acquirer
■
Transaction demonstrates FT Partners’ continued success
advising top-tier financial technology companies
Financial Technology Partners LP
FTP Securities LLC
is pleased to announce its exclusive role as
sole strategic and financial advisor to
in its 80% majority sale to
~$ 350,000,000
The Only Investment Bank
Focused Exclusively on Financial Technology
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Overview of FT Partners
FT Partners Advises on Jack Henry’s $300 Million Acquisition of iPay
Transaction Overview and Rationale
Overview of Transaction
■
Jack Henry & Associates ("Jack Henry"; NASDAQ: JKHY)
announced the completion of its acquisition of iPay
Technologies ("iPay") for $300 million in cash
■
iPay provides turnkey, SaaS-based bill pay solutions to over
3,600 financial institutions across the country
■
Jack Henry provides integrated technology solutions and data
processing services to financial institutions including
commercial banks and credit unions; the Company had a ~$2
billion market cap at the time of the transaction
■
iPay represented Jack Henry's largest acquisition to-date
Significance of Transaction
■
iPay's industry-leading, proven solutions complement Jack
Henry's existing offerings, providing significant cross-sell
opportunities and extending Jack Henry's reach outside of its
core client base
■
iPay's compelling financial profile increases Jack Henry's
transaction-based and recurring revenue streams
■
The acquisition enables Jack Henry to better serve customers
and channel partners through availability of enhanced products
and services
FT Partners’ Role
■
FT Partners has worked closely with Jack Henry and its
management team for several years and has advised on its
two largest acquisitions
■
FT Partners leveraged its extensive transactional experience
in the payments and banking sector to provide guidance on
appropriate deal structure and support during key negotiations
Financial Technology Partners LP
FTP Securities LLC
is pleased to announce its exclusive role as
sole debt capital advisor
in its acquisition of
for total consideration of approximately
$ 300,000,000
The Only Investment Bank
Focused Exclusively on Financial Technology
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Overview of FT Partners
FT Partners Advises OzForex on its A$480 Million Sale & IPO
Transaction Overview and Rationale
Overview of Transaction
■
OzForex Group (“OzForex”) completed its Sale & Initial Public
Offering and began to trade on the Australian Stock Exchange
(“ASX”) under the ticker symbol OFX
–
■
■
Stock closed first day of trading up ~30%
OzForex is an online, global payments provider that offers
individuals and SMBs a platform to purchase foreign currency
to facilitate international transactions
Prior to the offering, OzForex was owned by Accel Partners,
The Carlyle Group, Macquarie Bank and other founder /
private investors
Significance of Transaction
■
Transaction was a sale of ~100% of the equity of the company
to a “club” of institutional investors, followed by an IPO (one of
the largest IPOs of an Australian company)
–
■
Highly innovative “club-deal” structure allowed for reduced
risk and certainty for existing investors
Investors given the ability to sell ~100% of their interests in the
Company; certain investors chose to retain a small portion of
their ownership
FT Partners’ Role
■
FT Partners served as exclusive Financial, Strategic and IPO
Advisor to OzForex and its Board of Directors
■
FT Partners managed the very unique dual-track M&A / sale
and IPO process, effectively achieving an “M&A” outcome for
shareholders in the public markets (~100% liquidity)
■
FT Partners’ advisory role simplified and expedited the “timeto-market” period due to the significant amount of up-front
work completed prior to the engagement of potential M&A sale
buyers and underwriters
Financial Technology Partners LP
FTP Securities LLC
is pleased to announce its exclusive role as
sole financial, strategic and IPO advisor to
in its
Initial Public Offering
valuing the equity at
A$ 480,000,000
The Only Investment Bank
Focused Exclusively on Financial Technology
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Overview of FT Partners
Selected FT Partners Transactions
in its sale to
in its Series B financing led by
from
for approximately
$20,000,000
$ 1,500,000,000
10
Overview of FT Partners
Selected FT Partners’ Research (click to view)
Research Report: Global Money Transfer
Affirm Raises $275 mm in Equity
and Debt Financing
PayPal Acquires Xoom for $890 mm
Credit Karma Raises $175 mm in Series D
Financing from Tiger Global, Valinor
and Viking Global Investors
WePay Raises $40 mm in Series D
Financing Led by FTV Capital
Optimal Payments Acquires
Skrill for $1.2 bn
Lending Club IPO: Post Quiet Period Review
Avant Credit Raises $225 mm in Series D
Financing Led by Tiger Global
FT Partners regularly publishes research highlighting the most important transactions, trends and insights impacting the global Financial Technology
landscape. Our unique insight into FinTech is a direct result of executing hundreds of transactions in the sector combined with over 13 years of exclusive
focus on Financial Technology. Please visit our subscription form to subscribe to our exclusive monthly newsletter and receive our research reports.
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Overview of FT Partners
Award-Winning Franchise Focused on Financial Technology
FT Partners has
been
recognized as
Investment
Banking Firm of
the Year and
regularly
achieves
Merger and
Financing Deal
of the Year
recognition
M&A Advisor
Awards
Institutional Investor
Annual Ranking
Middle Market
Financing Awards
2014
■ Equity Financing Deal of the Year
■ Professional Services Deal of the Year, Above $100mm
2012
■ Dealmaker of the Year
■ Professional Services Deal of the Year, Above $100 mm
2011
■ Boutique Investment Bank of the Year
■ Deal of the Decade
■ 10 Deal of the Year Nominations Across 9 Categories
2010
■ Upper Middle Market Deal of the Year, Above $500 mm
■ IT Services Deal of the Year, Below $500mm
■ Cross-Border Deal of the Year, Below $500mm
2007
■ Dealmaker of the Year – Steve McLaughlin
■ Business to Business Services Deal of the Year
■ Computer and Information Technology Deal of the Year, Above $100mm
■ Financial Services Deal of the Year, Above $100mm
2006-2008 ■ Steve McLaughlin consecutively ranked (2006, 2007 and 2008) among
the top Bankers in Financial Technology
2008
■ Equity Financing Dealmaker of the Year – Steve McLaughlin
■ Information Technology Deal of the Year
■ Financial Services Deal of the Year
2006
■ Financing Professional of the Year – Steve McLaughlin
■ Financing Deal of the Year - Equity
■ Financing Deal of the Year - Debt
Note: Awards won highlighted in bold, italics denote categories where Financial Technology Partners was a finalist.
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